VMI stands for Vendor Managed Inventory. What does it entail?

• A. Vendor Managed Inventory: the supplier manages inventory for the buyer.
• B. Value Managed Inventory: the buyer controls product value.
• C. Variable Managed Inventory: inventory varies with demand.
• D. Vendor Maintained Inventory: the seller keeps stock.

Answer: (A)

Vendor Managed Inventory means the supplier actively manages the buyer’s stock rather than the buyer issuing purchase orders and handling replenishment. The supplier watches inventory levels, uses sales and forecast data, and replenishes goods to meet demand—often delivering to the buyer’s facility or from the supplier’s warehouse. This setup aligns supplier production and deliveries with what the buyer actually uses, reducing stockouts and carrying costs. It relies on data sharing and collaboration, usually supported by integrated systems so the supplier can see real-time inventory and future needs. The buyer gains smoother availability and less administrative work, while the supplier enjoys steadier demand and a stronger partnership. The other descriptions don’t fit because they describe ownership, control, or management in ways that don’t reflect the supplier-led replenishment and collaborative monitoring at the heart of VMI.